Epicept Announces Positive NP-1, Then Comes the Direct Offering Print E-mail
By Vinny Cassano   
Tuesday, 08 February 2011 10:26

An early Monday press release by Epicept Corporation (Nasdaq:EPCT}announced that a Phase IIb trial for NP-1, a topical analgesic cream, proved successful when treating patients with chemotherapy-induced peripheral neuropathy (CPN). NP-1 is also being developed to treat other indications of pain from peripheral neuropathies.

The successful trial led to the enthusiastic CEO of Epicept, Jack Talley, predicting that NP-1 has the potential to burst into the solid market of patients suffering from pain as a result of CPN, a condition for which - according to Talley - there is currently no effective treatment. Talley also made reference to discussing results with "prospective partners for the Phase III development and commercialization of NP-1." The CEO's comments give clear indication to investors that Epicept intends to partner this product from here on out.

That may stave off any threat of a significant cash raising event for the short term as NP-1 is shelved until a partner comes along with cash and the willingness to bring the product through Phase III, but you also can't help but remember how long Epicept kept investors hanging while they searched for a partner for Ceplene in Europe; with that in mind, there's no telling how long it will take Talley to land an NP-1 deal, and until he does, Monday's press release is encouraging, but not highly relevant to today.

However, the fairly quick signing of a partner could change that and rebuild some credibility that may have been lost with the Ceplene partnership fiasco. To the defense of Epicept, on the other hand, market conditions were awful when the search for a Ceplene partner was being conducted, and to compare that search with the search for an NP-1 deal - being conducted in more favorable conditions - may not be entirely fair.

I've long followed this company through the various ups and downs, and it looks the wheels are back on track after surviving the worst of the global economic crisis.

Ceplene is making strides in Europe, was recently approved in Israel, and there is a solid course of action to have it approved in the United States, as well. Additionally, possibly the most lucrative product potential for the company lies in the anti-tumor agent Crolibulin, for which the National Cancer Institute (NCI) just initiated a Phase II trial.

With the past volatility and constant threat of financing needs, EPCT should still be considered a speculative long term pick with possible short term potential, but the news has been encouraging over the past couple of months, and as the pipeline develops, the true potential of the company is beginning to reveal itself. Still not a solid enough pick to consider as a pure buy and hold just yet (this has been a better trade than a hold over the years), but there's nothing wrong with hanging onto a core group of shares for the long run, in my opinion, because NP-1, Crolibulin and the not-much-heard-from Azixa all hold significant market potential, if they make it that far.

Wouldn't chase it, but worth adding on any dips.

On that note, a modest dip may be in the works as the company announced a registered direct offering well after the market close on Monday.  The offering will net Epicept nearly $7 million and be used for general corporate purposes.

Disclosure: Long EPCT.

Vinny also authors the popular stock investing blog, VFC's Stock House.

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